Christmas in July -- E-Tailers Warm Up for the Holiday Season; Computerworld Report Gets the Goods on Holiday Online Shopping.

Business/Technology & Retail Editors

FRAMINGHAM, Mass.--(BUSINESS WIRE)--July 7, 2000

With the holidays just four short months away, online retailers are beefing up their operations to avoid a repeat of last year's well publicized electronic-retailing fiascoes, reveals a new report from Computerworld, the information services company for IT Leaders.

Last year, 40 percent of online shoppers in the U.S. reported problems with online stores during the pre-holiday shopping season and, as Computerworld discovered, dissatisfied customers often did not return to a site after being burned the first time. This year, the stakes are even higher, with the online retail market projected to grow to $61 billion in revenues. Because repeat customers are the bread and butter of any retail business, online retailers are working to ensure that technical problems do not drive away customers in holiday season 2000.

Computerworld found that last year, Internet customers' biggest post-holiday shopping complaints concerned retailing fundamentals, such as finding the products they wanted. Additionally, many shoppers who reported problems with online stores cited out-of-stock items as their biggest headaches along with delivery problems, steep shipping costs and difficulties connecting to shopping Web sites.

As the Computerworld report reveals, e-tailers' loss of customers also means the money spent on marketing and advertising to acquire customers in the first place was wasted. According to the report, last year, customer acquisition costs across all channels jumped by 15 percent to $38 per customer. Those figures jumped even higher during the holidays, to $108 per customer for pure-play retailers.

For companies like Toys R' Us Inc., which was forced to send an eleventh-hour "we're sorry" memo to customers whose early December orders did not arrive in time for last Christmas, the priority has been to build up staff and strengthen infrastructure and fulfillment operations.

Computerworld reports that Toys R' Us has a new operating system application that can handle three to four times the amount of traffic compared to last year. The company also has quadrupled their fulfillment capacity for this holiday season by adding additional warehouse space in California and Pennsylvania.

In addition, by developing a new program that extends and enhances the information available to customers, Toys R' Us hopes to improve its customer service infrastructure and its e-mail and telephone responses.

"It's hard to think about the holidays when summer is in full swing, but retailers are well aware that the most profitable shopping season of the year is just around the corner," said Maryfran Johnson, editor-in-chief of Computerworld. "It is clear that for online retailers the big winners for the holiday season will be the companies that learned from last year's mistakes and made early preparations."

The Computerworld report will be on news stands next week in the July 10 issue and online at www.computerworld.com.

Computerworld, Inc. is a complete information services company for the IT Leader community, providing print and online publications, books, conferences and research services. The company's flagship weekly newspaper for IT Leaders has been recognized numerous times by Folio: Magazine and the Computer Press Association as the best computer newspaper. Computerworld, with a circulation of 250,000, is read by more senior-level managers than any other IT newsweekly, according to IntelliQuest CIMS v.6.0. News and resources for the IT Leader community are available through Computerworld's Web site at www.computerworld.com. Computerworld is based in Framingham, MA.

Computerworld is a business unit of IDG, the world's leading IT media, research and exposition company. IDG publishes more than 300 magazines and newspapers and 4,000 book titles and offers online users the largest network of technology-specific sites around the world through IDG.net (http://www.idg.net), which comprises more than 270 targeted Web sites in 70 countries.

IDG is also a leading producer of 168 computer-related expositions worldwide, and provides IT market analysis through 50 offices in 43 countries worldwide. Company information is available at http://www.idg.com.